EUROPE’s biggest price-comparison site, Moneysupermarket.com, could be worth as much as £1.3 billion when it floats on the stock market at the end of this month in the biggest share offer to retail investors in seven years.
According to research seen by The Sunday Times and undertaken by Credit Suisse, the investment bank leading the float, the firm is valued at between £950m and £1.3 billion after plans to raise £180m in new money are taken into account.
Simon Nixon, the co-founder and chief executive, has been determined to launch an open offer where small investors are able to take part to underline the company’s position as a consumer champion. The last major open offer to retail investors is thought to have been the flotation of the travel website Lastminute.com in 2000. Companies are usually advised against launching open offers by brokers on cost grounds.
The float is expected to cost Moneysupermarket a total of £18m in fees.
Moneysupermarket has offered its 2m customers preferential treatment. However, the exact allocation of shares between retail and institutional shareholders has yet to be decided.
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The Credit Suisse research also reveals that Moneysupermarket is forecast to grow rapidly over the next four years with turnover soaring from £104m last year to almost £300m by 2011. Pretax profits are expected to jump from £11.7m last year to £81m. Pretax profits have fallen from £15.9m in 2004 to £14.7m in 2005, as the directors have taken money out of the business. Last year, they were paid a £20.9m special dividend, including about £15m paid to Nixon.
However, earnings before interest, tax, depreciation and amortisation (ebitda) have soared from £17.6m in 2004 to £33m last year while turnover has jumped from £59.7m to £104m. If Moneysupermarket is valued at the top of the range, the group will trade at about 20 times its forecast ebitda for 2008, far higher than the average 13.3 times for European internet companies.
Nixon, who first looked at floating the firm during the dotcom boom, is understood to have turned down offers from private equity and trade buyers.
He is expected to make more than £200m from the float. The 39-year-old Cheshire-based businessman holds about 90% of the shares after he recently bought out the bulk of the equity held by Duncan Cameron, his estranged business partner, for £162m.
Nixon is expected to reduce his holding to about 50%, worth more than £500m, while Cameron will retain 5% after the company is listed. Following the float Nixon will be prevented from selling his remaining shares for three years. Other members of the management team and staff will hold about 5%.
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Nixon and Cameron set up in business 14 years ago with an online magazine for mortgage brokers before launching their first online comparison site in 1999.
About £180m of the proceeds from the float will be used to pay down the debt raised to buy out Cameron’s stake. Moneysupermarket is also looking at making acquisitions. The group, which operates finance, home services and travel-comparison sites, has also outlined plans to expand on the Continent.